Illinois will become the third state to implement guidelines for companies to check if insureds who die and have a claim filed for their insurance contracts had multiple policies in force.
The regulation (Title 50 of the Administrative Code, Part 919) was finalized during the week of July 8 and will become effective in July 2003.
Before being approved, the regulation was changed to require companies to check every date two years before and two years after an insureds birth date to see if there are additional policies in the insureds name.
Originally, the draft had required a three-year search before and after a birth date, but a cost benefit analysis convinced the department to reduce the timeframe, according to Illinois Insurance Director Nat Shapo. There will probably be a 5% loss of potential hits and a 33% savings in the burden of compliance, he adds.
New York currently has a circular letter and Massachusetts has a bulletin on the issue. New York issued Circular Letter # 15 on July 3, 2001, which requires insurers to conduct a search for other policies on an insureds life once a claim is filed. Massachusetts Bulletin 2001-07 requires an insurer to search for multiple policies with “due diligence.”